Key Takeaways

  • Most Texas business entities do not file a traditional annual report with the Secretary of State, but must file an annual franchise tax report with the Comptroller.
  • The franchise tax report is due by May 15 each year and includes both a financial statement and a Public Information Report (PIR).
  • Entities that fail to file risk forfeiture of their right to do business in Texas.
  • Out-of-state (foreign) entities operating in Texas may also need to file franchise tax reports and periodic reports.
  • Some entity types such as LPs and professional associations file periodic reports or annual statements instead.
  • You can file the franchise tax report online through the Texas Comptroller’s eSystems/Webfile.
  • Penalties include late fees, tax penalties, and possible revocation of business privileges.

What is the Texas Annual Report?

A Texas Annual Report is a yearly business report filed by companies conducting business in Texas. While the Texas Secretary of State doesn’t require a Limited Liability Company (LLC), Limited Liability Partnership (LLP), or corporation to file an annual report with the State, other types of annual reports, including periodic reports, may be required depending on the type of business you operate.

Who Must File a Texas Annual Report or Equivalent?

Texas does not require most businesses to file a traditional “annual report” with the Secretary of State. However, nearly all taxable entities must file an annual franchise tax report with the Texas Comptroller of Public Accounts. This includes:

  • Corporations
  • Limited Liability Companies (LLCs)
  • Limited Partnerships (LPs)
  • Professional Associations
  • Foreign entities registered to do business in Texas

Some exceptions include general partnerships with only individual partners and sole proprietorships. Still, even these may have other state filing obligations such as sales or employment tax filings.

Types of Annual Reports

  • Application Report: For an LLP, an application report must be filed on a yearly basis with the Texas Secretary of State.
  • Annual Statement of a Professional Association. This annual statement must be filed by a professional association.
  • Periodic Report of a Limited Partnership. This periodic report must be filed by a LP, not annually, but periodically usually once every four years.
  • Certificate of Reinstatement of a Professional Association after Failure to File Annual Statement. This form must be filed by a professional association that failed to file an annual statement. Therefore, before the entity can begin conducting business again in the State of Texas, it must first file this certificate of reinstatement. Late fees will also apply.
  • Application for Reinstatement of Limited Liability Partnership Status. This form should be used by a partnership when applying for reinstatement after having failed to file an annual report. Late fees will also apply in this situation.
  • Application for Reinstatement. This form is used for a business that is applying for reinstatement after having either ceased business voluntarily or having its business certificate revoked, for reasons other than a failure to file the annual statement.
  • Reports Unit Payment Form. This form is to be used when transmitting credit card or any type of payment information via fax.

Public Information Report and Ownership Details

Alongside the franchise tax report, businesses are also required to submit a Public Information Report (PIR). This report verifies ownership and management information and ensures that the state’s public records remain current. The PIR includes:

  • Names and addresses of officers, directors, members, or managers
  • Registered agent information
  • Principal place of business

The PIR is filed annually with the franchise tax report, typically through the Comptroller’s Webfile system.

Texas Franchise Tax Report

Since LLCs, LLPs, and corporations aren’t required to file an annual report, they instead submit an information report while paying yearly franchise tax. Such filing is submitted to the Texas Comptroller of Public Accounts (CPA). The first franchise tax report is due May 15 of the year after your first filing in the State of Texas. Therefore, if you established your business in July 2016, then your initial franchise tax report would be due May 15, 2017.

The report itself can be rather complex and tedious. You should seek the help of your accountant to ensure that all items are filled out properly. The franchise report fees are as follows:

  • 0.575 percent for companies with $10 million or less in annual revenue and filing via the E-Z Computation form
  • Texas nonprofit and foreign companies: $5
  • Texas domestic/foreign LPs: $50
  • Texas law enforcement/military charities: $50. Note that most charities in Texas are unregulated. However, if the charity raises money that will benefit military or law enforcement, then this fee applies.

If you operate Texas Limited Partnership (LP), periodic reports are also required to be filed at least once every four years.

Filing Methods and Deadlines

The deadline for filing your Texas franchise tax report is May 15 each year. If May 15 falls on a weekend or holiday, the due date rolls to the next business day. You can file the report:

  • Online using the Texas Comptroller’s eSystems
  • Through tax preparation software authorized by the Comptroller
  • By mail (less common and generally discouraged due to processing delays)

Entities that owe no franchise tax must still file a No Tax Due Report along with their PIR.

Failure to file by the deadline can result in a $50 late fee (even if no tax is due), a 5% penalty, and additional 5% interest if more than 30 days late. Repeated noncompliance may lead to forfeiture of corporate privileges.

Initial Report Requirements for Texas LLCs

Texas does not require new LLCs to file an initial report immediately upon formation. Instead, the first reporting obligation arises in the calendar year following the business's establishment. The annual franchise tax report, which includes the Public Information Report (PIR), is due by May 15 of that year. This delay gives new businesses time to get up and running before facing state filing obligations.

Penalties for Failing to File Franchise Tax Reports

Failing to file a Texas Franchise Tax Report can lead to significant financial consequences. A $50 penalty applies for late filings, and an additional 5% tax penalty is imposed. If the report remains unfiled for more than 30 days after the deadline, a second 5% penalty may apply. For nonprofits, a monthly late fee of $1 is assessed, while Texas limited partnerships (LPs) face a monthly penalty of $25 for overdue periodic reports. Continued noncompliance can ultimately result in the forfeiture of your business’s right to operate in Texas.

Who Can File the Franchise Tax Report?

The responsibility for filing the franchise tax report depends on the business structure. For LLCs, an officer, director, or managing member may submit the report. In other business types, such as partnerships or corporations, a partner or registered agent is typically authorized to file on behalf of the entity. It's important to ensure that the person filing has accurate, up-to-date information to avoid errors or penalties.

Understanding Texas Business Tax Obligations

Texas LLCs are treated as pass-through entities for federal tax purposes, meaning the business itself doesn’t pay federal income tax. However, Texas imposes a state franchise tax on LLCs, regardless of their federal tax classification. Even if an LLC elects to be taxed as a corporation, the franchise tax still applies. The tax is based on the company’s net surplus, calculated by subtracting member contributions from total net assets. Depending on your revenue, you may use either the E-Z Computation Form or the Long Form to file. If your business owes no tax, you may submit a No Tax Due Information Report instead.

State Employer Taxes and Unemployment Insurance

If your LLC hires employees, you must pay state employer taxes, including unemployment insurance (UI) tax. While Texas does not have a personal income tax, UI tax must be paid quarterly to the Texas Workforce Commission (TWC). Employers must also file wage reports. It's important to register with the TWC and understand your obligations, especially if an employee is terminated and eligible for unemployment benefits.

Sales and Use Tax Requirements

LLCs that sell goods or taxable services in Texas are required to collect and remit sales tax. This includes retail sales, rentals, and certain services like data processing or entertainment. You can obtain a sales tax permit online, by mail, or in person at a Comptroller’s office. Once registered, you’ll need to report and pay sales tax either monthly, quarterly, or annually, depending on your volume of sales.

Registering to Do Business in Other States

If your Texas LLC plans to operate in other states, you may be required to register as a foreign entity in each of those jurisdictions. This generally involves applying for a Certificate of Authority and paying any applicable state fees. Registration requirements vary by state and can be triggered by activities such as having employees, leasing office space, or regularly soliciting business—even online. Check with the Secretary of State in each relevant state to ensure compliance and avoid penalties.

What Happens if You Don't File?

Failure to meet Texas annual report filing obligations—whether the franchise tax report or other required periodic filings—can have serious consequences:

  • Immediate monetary penalties, including flat fees and escalating interest
  • Loss of good standing, which can impact the ability to secure financing or enter contracts
  • Forfeiture of corporate privileges, meaning your business can lose the legal right to operate in Texas
  • Potential reinstatement fees and additional paperwork to return to compliance

Entities that lose their registration must apply for reinstatement, pay all outstanding fees, and resolve any compliance issues.

Frequently Asked Questions

1. Is a Texas Annual Report required for LLCs? No, LLCs do not file a traditional annual report with the Secretary of State, but they must file a franchise tax report and a Public Information Report with the Comptroller each year.

2. What is included in the Public Information Report? The PIR includes information on company officers, directors, managers, registered agents, and the principal place of business.

3. How do I file the Texas franchise tax report? You can file online using the Texas Comptroller’s Webfile system, through approved tax software, or by mail.

4. When is the Texas franchise tax report due? The report is due annually on May 15. If the deadline falls on a weekend or holiday, it rolls to the next business day.

5. What are the penalties for not filing? Failure to file can result in a $50 penalty, 5–10% interest charges, and the potential forfeiture of the business’s legal right to operate in Texas.

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